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Performance audit, Colorado River Union High School District 2013

Performance audit, Colorado River Union High School District 2013

Performance Audit
Colorado River Union
High School District
Division of School Audits
Debra K. Davenport
Auditor General
August • 2013
Report No. 13-07
A REPORT
TO THE
ARIZONA LEGISLATURE
The Auditor General is appointed by the Joint Legislative Audit Committee, a bipartisan committee composed of five senators and
five representatives. Her mission is to provide independent and impartial information and specific recommendations to improve the
operations of state and local government entities. To this end, she provides financial audits and accounting services to the State and
political subdivisions, investigates possible misuse of public monies, and conducts performance audits of school districts, state
agencies, and the programs they administer.
The Joint Legislative Audit Committee
Audit Staff
Ross Ehrick, Director
Mike Quinlan, Manager and Contact Person
Christine Medrano, Team Leader
Ben Gutierrez
Tammy Seilheimer
Copies of the Auditor General’s reports are free.
You may request them by contacting us at:
Office of the Auditor General
2910 N. 44th Street, Suite 410 • Phoenix, AZ 85018 • (602) 553-0333
Additionally, many of our reports can be found in electronic format at:
www.azauditor.gov
Representative John Allen, Vice Chair
Representative Paul Boyer
Representative Andrea Dalessandro
Representative Martin Quezada
Representative Kelly Townsend
Representative Andy Tobin (ex officio)
Senator Chester Crandell, Chair
Senator Judy Burges
Senator Rich Crandall
Senator Steve Gallardo
Senator Katie Hobbs
Senator Andy Biggs (ex officio)
2910 NORTH 44th STREET • SUITE 410 • PHOENIX, ARIZONA 85018 • (602) 553-0333 • FAX (602) 553-0051
MELANIE M. CHESNEY
DEPUTY AUDITOR GENERAL
DEBRA K. DAVENPORT, CPA
AUDITOR GENERAL
STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL
August 8, 2013
Members of the Arizona Legislature
The Honorable Janice K. Brewer, Governor
Governing Board
Colorado River Union High School District
Mr. Riley Frei, Superintendent
Colorado River Union High School District
Transmitted herewith is a report of the Auditor General, A Performance Audit of the Colorado
River Union High School District, conducted pursuant to A.R.S. §41-1279.03. I am also
transmitting within this report a copy of the Report Highlights for this audit to provide a quick
summary for your convenience.
As outlined in its response, the District agrees with all of the findings and recommendations.
My staff and I will be pleased to discuss or clarify items in the report.
Sincerely,
Debbie Davenport
Auditor General
2013
August • Report No. 13-07
Our Conclusion
REPORT HIGHLIGHTS
PERFORMANCE AUDIT
Similar student achievement and efficient operations
overall
Student achievement similar to
peer districts’—In fiscal year 2011,
Colorado River UHSD’s student AIMS
scores were similar to the peer districts’
averages. Additionally, under the
Arizona Department of Education’s A-F
Accountability Letter Grade System, the
District received an overall letter grade
of D, as did the only peer district that
was also graded. Further, Colorado
River UHSD’s 71-percent graduation
rate was similar to the peer districts’
74-percent average but lower than the
State’s 78-percent average.
Most operational costs similar to or lower
than peer districts’—In fiscal year 2011,
Colorado River UHSD operated efficiently
overall with most of its nonclassroom costs
similar to, or lower than, its peer districts’
averages. The District’s administration and
food service programs operated efficiently,
with much lower costs and despite a slightly
higher plant operations cost per pupil, the
District’s cost per square foot was similar
to the peer district average. The District’s
transportation costs were mixed with a higher cost per rider, but lower cost per mile.
Colorado River Union
High School District
District needs to strengthen controls over computer
systems, fuel purchases, and cash handling
Colorado River UHSD’s poor controls over its computer network, student information
system, and accounting system expose the District to an increased risk of errors and
fraud. Additionally, the District needs to improve controls over its fuel purchases and
bookstore cash-handling procedures.
Increased risk of unauthorized access to critical systems—Four district employees
have more access to the accounting system than is needed to perform their job duties.
Although no improper transactions were detected in the items we tested, access
beyond that which is necessary to perform job functions exposes the District to an
increased risk of fraud and errors. Additionally, the District does not have procedures
in place to ensure that only current employees have access to critical applications.
We found that five user accounts on the network and one user account in the student
information system were linked to employees who no longer worked for the District.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Math Reading Writing
Colorado River UHSD Peer group State-wide
Percentage of students who met or
exceeded state standards (AIMS)
Fiscal year 2011
Comparison of per-pupil expenditures
by operational area
Fiscal year 2011
Colorado River UHSD
Table 1: Comparison of Per-Pupil Expenditures FY 2011
HIGHLIGHTS:
Spending
Colorado
River
UHSD
Peer
group
average
State
average
Total per pupil $6,404 $7,026 $7,485
Classroom dollars 3,654 3,783 4,098
Nonclassroom
dollars
Administration 579 736 728
Plant operations 980 917 927
Food service 197 351 375
Transportation 360 360 352
Student support 316 528 571
Instruction
support 318 351 434
Per pupil
Colorado
River
UHSD
Peer
group
average
Administration $579 $736
Plant operations 980 917
Food service 197 351
Transportation 360 360
In fiscal year 2011, Colorado
River Union High School
District’s student AIMS
scores were similar to the
peer districts’ averages, and
it operated efficiently overall
with similar or lower costs
in most operational areas.
The District’s administrative
costs were lower than peer
districts’. However, it needs
to strengthen some controls
over its computer systems
and cash handling. The
District’s plant operations
costs per square foot were
similar to peer districts’, and
its food service costs were
much lower. The District’s
transportation costs were
mixed with a higher cost per
rider, but lower cost per mile;
however, the District needs to
improve its controls over fuel
purchases. Further, the District
did not maintain complete
Proposition 301 pay records,
and some of the District’s
performance pay plan goals
were so easily met that they
did not promote improved job
performance.
Proposition 301 pay records incomplete and some performance pay goals
did not promote improved performance
In fiscal year 2011, all of the District’s eligible employees received the full amount of performance pay. However,
the District did not maintain documentation to show that each of these employees had actually met their goals
to receive such amounts. Additionally, the District awarded performance pay for some goals that were easily
met. For example, teachers were awarded performance pay for administering a test of academic progress, but
they did not have to show that students met any expected or desired results on the test.
The District should:
••Retain supporting documentation to show that performance pay goals were met.
••Establish meaningful and measureable performance goals.
Recommendations
Colorado River Union
High School District
REPORT HIGHLIGHTS
PERFORMANCE AUDIT
August 2013 • Report No. 13-07
A copy of the full report is available at:
www.azauditor.gov
Contact person:
Mike Quinlan (602) 553-0333
Further, the District needs to strengthen password requirements for its network, student information system,
and accounting system.
District needs to strengthen controls over fuel purchases—Because Colorado River UHSD does not own
its own fuel tank, it obtains fuel from a local vendor’s site. However, the District was unable to determine from
the vendor’s billing statements whether all fuel purchases were made by district employees for district vehicles
and were appropriate based on transaction details. Although the vendor statements identified the vehicle
number, date, time, and type and amount of fuel purchased, they did not identify the employee fueling or the
vehicle odometer reading, and no fuel card was required to pump fuel. Instead, individuals only had to enter
an easily determined number to operate the fuel pumps. District drivers use fuel cards to purchase fuel from
other vendors while transporting students on field trips and athletic trips. However, the District did not ensure
that all fuel purchase receipts were submitted. We found that receipts for 57 of 247 fuel purchases, totaling
about $2,400, from one vendor were missing. Without receipts, the District cannot ensure that all purchases
are appropriate and that the District is being billed properly.
District should improve cash-handling procedures for bookstore operations—In fiscal year 2011, Colorado
River UHSD received approximately $730,000 at its school bookstores for various purposes, including student
activities, student course fees, and tax credit donations. However, the District did not have proper procedures
in place to ensure that money received was accounted for properly. For example, the bookstore at one school
used three different methods to record sales, but none of these methods were used consistently. Further, the
District lacked a sufficient process of reconciling daily sales to cash collected. As a result, the District could
not be sure that all sales had been recorded, leaving these monies more susceptible to loss, theft, or misuse.
The District should:
••Limit employees’ access to only those accounting system functions needed to perform their work.
••Implement and enforce stronger password requirements.
••Establish a process to promptly delete access to the system when an employee terminates employment.
••Work with its local fuel vendor to ensure billing statements include a means of identifying individuals
purchasing fuel and the odometer readings of the vehicles fueled.
••Ensure fuel card receipts are submitted and properly reconciled for all purchases.
••Strengthen bookstore cash collections procedures.
Recommendations
TABLE OF CONTENTS
continued
page i
Office of the Auditor General
1
Student achievement similar to peer districts’ averages 1
District operated efficiently overall with most costs similar to or lower than peer districts’ 2
Finding 1: District needs to strengthen controls over computer
3
3
4
4
5
5
Finding 2: District’s Proposition 301 pay records incomplete and some
7
Pay records were incomplete 7
Some performance pay goals so easily met that they did not promote improved
performance 8
9
Appendix
Objectives, Scope, and Methodology a-1
District Response
TABLE OF CONTENTS
concluded
page ii
State of Arizona
Table
1 Comparison of per-pupil expenditures by operational area
2
Figure
1 Percentage of students who met or exceeded state standards (AIMS)
1
DISTRICT OVERVIEW
page 1
Office of the Auditor General
Colorado River Union High School District is located about 50 miles north of Lake Havasu City on
the Arizona-Nevada border, in Mohave County. In fiscal year 2011, the District served 2,327 students
in 9th- through 12th-grade at its two schools.
In fiscal year 2011, Colorado River UHSD’s student achievement was similar to the peer districts’, on
average.1 Overall, the District operated efficiently, with most costs similar to or lower than peer
districts’. The District operated its administration and food service programs efficiently with costs that
were much lower than peer district averages, and despite a slightly higher plant operations cost per
pupil, the District’s cost per square foot was similar to the peer districts’ average. Additionally, its
transportation program operated with a higher cost per rider but lower cost per mile. However, the
District needs to strengthen controls over its computer systems, fuel purchases, and cash handling.
Additionally, the District should strengthen its performance pay plan goals and retain supporting
documentation to demonstrate that goals were met before payments from the Classroom Site Fund
are made.
Student achievement similar to peer
districts’ averages
In fiscal year 2011, 40 percent of the District’s students
met or exceeded state standards in math, 73 percent in
reading, and 53 percent in writing. As shown in Figure 1,
these scores were similar to the peer districts’ averages.
Further, under the Arizona Department of Education’s
A-F Accountability Letter Grade System, the District and
both of its schools received an overall letter grade of D,
as did one of the three peer districts.2 Letter grades for
the remaining two peer districts were not reported for
fiscal year 2011 because they had too few students
tested. The District’s fiscal year 2011 71-percent
graduation rate was similar to the peer districts’
74-percent average but lower than the State’s 78-percent
average.
1 Auditors developed two peer groups for comparative purposes. See page a-1 of this report’s Appendix for further explanation of the peer
groups.
2 The Arizona Department of Education’s A-F Accountability Letter Grade System assigns letter grades based primarily on academic growth
and the number of students passing AIMS.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Math Reading Writing
Colorado River
UHSD
Peer group
State-wide
Figure 1: Percentage of students who met or
exceeded state standards (AIMS)
Fiscal year 2011
(Unaudited)
Source: Auditor General staff analysis of fiscal year 2011 test results
on Arizona’s Instrument to Measure Standards (AIMS).
page 2
State of Arizona
District operated efficiently
overall with most costs similar
to or lower than peer districts’
As shown in Table 1 and based on auditors’
review of various performance measures, in
fiscal year 2011, Colorado River UHSD
operated efficiently overall with most of its
nonclassroom costs similar to, or lower
than, its peer districts’ averages. The
District’s fiscal year 2011 per-pupil spending
of $6,404 and classroom spending of
$3,654 were both slightly lower than peer
districts’ primarily because it did not receive
additional funding through voter-approved
budget overrides and received less student
transportation funding because it drove
fewer total miles. Although the District
operated efficiently overall, auditors identified a few opportunities for improvement.
Much lower administrative costs—Colorado River UHSD’s fiscal year 2011 administrative
costs were much lower per pupil than peer districts averaged—$579 compared to $736. The
District spent less on administration primarily because it employed fewer administrative staff as a
result of operating fewer schools than peer districts, on average. However, this report identified
some administrative practices that need strengthening (see Finding 1, page 3).
Similar plant operations costs—Colorado River UHSD’s $5.45 plant operations cost per
square foot was similar to the peer districts’ average of $5.52. The District’s plant operations cost
per pupil was slightly higher than peer districts averaged because, although the District had fewer
schools, its schools were larger, operating with more square footage per student.
Efficient food service program—The District operated its food service program efficiently with
a much lower cost per meal than the peer districts averaged—$1.79 compared to $2.60.
Additionally, the District’s program was self-supporting in fiscal year 2011. The District kept its
per-meal costs low by using student workers to help serve meals and by maximizing its use of
United States Department of Agriculture commodities.
Mixed transportation costs—Although the District’s cost per rider of $1,238 was 34 percent
higher than the peer districts’ average of $927, its per-mile cost of $2.67 was 9 percent lower than
the peer districts’ average cost of $2.93. These mixed costs are the result of the District driving 43
percent more miles per rider than peer districts, on average. However, the District needs to
strengthen controls over its fuel purchases (see Finding 1, page 3).
Colorado River UHSD
Table 1: Comparison of Per-Pupil Expenditures FY 2011
HIGHLIGHTS:
Spending
Colorado
River
UHSD
Peer
group
average
State
average
Total per pupil $6,4 04 $7,0 26 $7,4 85
Classroom dollars 3,654 3,783 4,098
Nonclassroom
dollars
Administration 579 736 728
Plant operations 980 917 927
Food service 197 351 375
Transportation 360 360 352
Student support 316 528 571
Instruction
support 318 351 434
Per pupil
Colorado
River
UHSD
Peer
group
average
Administration $5 79 $7 36
Plant operations 980 917
Food service 197 351
Transportation 360 360
Table 1: Comparison of per-pupil
expenditures by operational area
Fiscal year 2011
(Unaudited)
Source: Auditor General staff analysis of fiscal year 2011 Arizona
Department of Education student membership data and
district-reported accounting data.
page 3
Office of the Auditor General
FINDING 1
District needs to strengthen controls over computer
systems, fuel purchases, and cash handling
Colorado River UHSD needs to improve controls over its computer network, student information
system, and accounting system. Although no improper transactions were detected in the fiscal year
2011 transactions auditors reviewed, these poor controls expose the District to an increased risk of
errors and fraud. Additionally, the District needs to improve controls over its fuel purchases and
bookstore cash-handling procedures.
Increased risk of unauthorized access to critical systems
The District has weak controls over user access to its network and student information and
accounting systems, increasing the risk of unauthorized access to these critical systems.
Broad access to accounting system—Four of the District’s 11 accounting system users
have access to the system beyond what is required to perform their job duties. Two of these
employees have the ability to add new vendors, create and approve purchase orders, and pay
vendors without an independent review. One employee has the ability to add new employees, set
pay rates, and process payroll payments without an independent review. A fourth district employee,
who is a user of the accounting system, is also responsible for administering the District’s
accounting system, meaning she has access to all functions and settings within the accounting
system. Although no improper transactions were detected in the 30 payroll and 30 accounts
payable transactions for fiscal year 2011 auditors reviewed, such broad access exposes the
District to increased risk of errors, fraud, and misuse of sensitive information, such as processing
false invoices or adding and paying nonexistent vendors or employees.
Weak password requirements—The District needs stronger password requirements for its
network, student information system, and accounting system. The District’s network and
accounting system passwords are assigned by district technicians, and employees are not
required to change their passwords. Further, if employees want to change their passwords,
technicians have to be made aware of what the new passwords are, and they are stored in a folder
on the network. Therefore, the passwords are known by more than one individual. The District’s
student information system passwords are determined by each individual user. However, the
page 4
State of Arizona
District has not established adequate password complexity requirements—that is, passwords
do not need to contain numbers or symbols. Lastly, users are not prompted to periodically
change passwords for any of the systems. Common practice requires passwords to be at
least eight characters, contain a combination of alphabetic and numeric characters, and be
changed periodically. Additionally, users should change assigned passwords at first login,
and only the users should know them. These practices would decrease the risk of unauthorized
persons gaining access to the systems.
Inadequate procedures for removing terminated employees’ access to critical
applications—The District does not have formal procedures in place to ensure that only
current employees have access to critical systems. Auditors found that 5 of the 224 user
accounts on the network and 1 of the 180 user accounts in the student information system
were linked to employees who no longer worked for the District. District officials stated that
terminated employee accounts are not always disabled in a timely manner because the
District does not have a formal process to notify the Information Technology (IT) department
when an employee leaves the District. To reduce the risk of unauthorized access, the District
should create a formal procedure and promptly remove access when a user is no longer
employed by the District.
Insufficient agreement for hosting student information system
Colorado River UHSD uses a vendor to administer and host its student information system.
However, the District’s written agreement with its vendor does not stipulate each party’s
responsibilities. The agreement should specify responsibilities such as software licensing;
establishing and maintaining user access; ownership of data; ensuring the security of data; data
backup, storage, and recovery; and removal of terminated employees’ access.
District needs to strengthen controls over fuel purchases
Because Colorado River UHSD does not own its own fuel tank, it obtains fuel from a local
vendor’s site. In fiscal year 2011, the District received billing statements from the vendor
identifying the vehicle number, date, time, and type and amount of fuel purchased. However, the
statements did not identify the employee fueling or the vehicle odometer reading because the
system was not set up to record this information. Further, no fuel card was required, and
individuals only had to enter an easily determined number to operate the fuel pumps. As a result,
the District was unable to determine from these statements whether all fuel purchases were
made by district employees for district vehicles and were appropriate based on transaction
details.
Additionally, Colorado River UHSD provides fuel cards to drivers to purchase fuel from two
different vendors while transporting students on field trips and athletic trips. Upon returning from
page 5
Office of the Auditor General
a trip, drivers are required to submit all fuel purchase receipts to the District so that fuel receipts can
be reconciled to the vendors’ monthly fuel card statements. However, auditors noted that many fuel
receipts were missing. More specifically, auditors reviewed 12 monthly fuel card statements for one
of the two vendors and found that the District lacked receipts for 57 of 247 fuel purchases, totaling
approximately $2,400. Although the purchases reviewed appeared reasonable, documentation
should be retained to help ensure that all purchases are appropriate and that the District is being
properly billed by the vendor.
District should improve cash-handling procedures for bookstore
operations
In fiscal year 2011, Colorado River UHSD received cash for various purposes, including student
activities, student course fees, and tax credit donations. The majority of this cash, approximately
$730,000, was received by the District’s individual school bookstores. However, the District did not
have proper procedures in place for its bookstore operations to ensure that money received was
accounted for properly. For example, the bookstore at one school used three different methods to
record its sales and lacked a sufficient process of reconciling daily sales to cash collected. The
bookstore used a receipt book, a cash register, and a software system, but none of these methods
were consistently used, and the District could not be sure that all sales had been recorded. Failure
to adequately account for all money received left these monies more susceptible to loss, theft, or
misuse.
Recommendations
1. The District should limit employees’ access to only those accounting system functions needed
to perform their work.
2. The District should implement and enforce password requirements related to password length,
complexity, and expiration, and only the user should know passwords.
3. The District should develop and implement a formal process to ensure that terminated
employees have their IT system access promptly removed.
4. The District should ensure that its written agreement with its IT service provider outlines each
party’s responsibilities for the District’s student information system.
5. The District should work with its local fuel vendor to ensure the vendor’s billing statements
include a means of identifying individuals purchasing fuel and the odometer readings of the
vehicles at the time of the fuel purchases.
page 6
State of Arizona
6. The District should ensure that all fuel card receipts are collected and properly reconciled
to credit card statements to ensure purchases are appropriate and billings are accurate
prior to payment.
7. The District should strengthen its procedures for recording cash collections and reconciling
daily bookstore sales to cash collections.
page 7
Office of the Auditor General
FINDING 2
District’s Proposition 301 pay records incomplete and
some performance pay goals did not promote improved
performance
In fiscal year 2011, Colorado River UHSD spent its Classroom Site Fund (CSF) monies for purposes
authorized by statute.1 However, the District did not maintain documentation showing whether
employees who received performance pay monies actually met their goals. Further, some of the
performance goals were so easily met that they did not promote improved performance.
Pay records were incomplete
In fiscal year 2011, all of the District’s eligible employees received the full amount of performance pay
for which they were eligible. However, the District did not maintain documentation to show that each
of these employees had actually met their goals to receive such amounts. According to the District’s
plan, eligible employees were to complete documentation demonstrating that performance goals
were met and submit the documentation to administrators for evaluation. However, according to
district officials, performance pay documentation was returned to the employees after the
performance pay evaluations were completed. The District had lists from its principals stating which
employees met their goals. However, because it returned all documentation to the employees, the
District could not provide additional support that the goals were actually met. School districts are
required by state records retention schedules to retain this type of documentation for 4 years.2
Further, based on one of the principal’s lists, it appeared as though 4 of the 38 eligible employees at
that site did not meet all of the goals; however, all of the employees on the list received the full
performance pay amount.
1 In November 2000, voters passed Proposition 301, which increased the state-wide sales tax to provide additional resources for education
programs. Under statute, these monies, also known as Classroom Site Fund monies, may be spent only for specific purposes, primarily
increasing teacher pay.
2 Arizona State Library, Archives, and Public Records. General Records Retention Schedule for All Public Bodies, Finance Records. Schedule
Number 000-11-76.
page 8
State of Arizona
Some performance pay goals so easily met that they did not
promote improved performance
In fiscal year 2011, the District made two separate payments to eligible employees for achieving
performance goals. The first payment was based on employees’ meeting the goals from the
fiscal year 2010 performance pay plan, and the second payment was based on employees’
meeting the goals from the fiscal year 2011 performance pay plan. However, both plans included
goals that were so easily met that they did not promote improved performance. For example,
Colorado River UHSD’s fiscal year 2010 performance pay plan allowed the following:
•• Teachers earned performance pay for administering a test regardless of how well
students performed on the test—Twenty percent of performance pay was earned by
teachers for administering a district-developed, standards-based student assessment of
academic progress. Teachers did not have to show that students met any expected or
desired results on the assessment; they simply had to administer the test.
•• Teachers earned performance pay for evaluating a parent/student survey regardless
of the parents’ or students’ reported satisfaction levels—Five percent of performance
pay was earned upon staff’s evaluating the results of a school quality parent and student
survey, but no minimum satisfaction level had to be met to receive the additional pay.
•• Teachers received performance pay for performing at minimum acceptable levels—
Teachers were eligible to receive approximately 38 percent of performance pay if they
achieved 29 of 32 items on the District’s teacher evaluation instrument and were not on an
improvement plan. However, according to district policy, a teacher who achieved only 29 of
32 of these items would be placed on an improvement plan. Therefore, the District rewarded
teachers with additional pay for meeting minimum district performance expectations rather
than for performance beyond what was required to avoid corrective action.
The District strengthened its fiscal year 2011 performance pay plan, which included goals related
to teacher professional development and performance, student achievement, and attendance
taking. However, the attendance-taking goal that made up 15 percent of the total potential
performance pay was easily met and did not promote improved performance. Specifically,
teachers were paid for taking accurate attendance, which was already required of a teacher by
district policy.
Awarding teachers performance pay for such easily obtained goals, and for performing duties
already required by their contracts, seems contrary to the goal of performance pay systems,
which are to provide powerful incentives for improved outcomes.
page 9
Office of the Auditor General
Recommendations
1. The District should ensure that it retains supporting documentation in accordance with state
records retention schedules to demonstrate that performance pay goals were met.
2. To promote improved performance, the District should establish meaningful and measureable
performance goals that are beyond what is already expected or required of employees.
page 10
State of Arizona
APPENDIX
page a-1
Office of the Auditor General
Objectives, Scope, and Methodology
The Office of the Auditor General has conducted a performance audit of the Colorado River Union
High School District pursuant to A.R.S. §41-1279.03(A)(9). Based in part on their effect on classroom
dollars, as previously reported in the Auditor General’s annual report, Arizona Public School District
Spending (Classroom Dollars report), this audit focused on the District’s efficiency and effectiveness
in four operational areas: administration, plant operations and maintenance, food service, and
student transportation. To evaluate costs in each of these areas, only operational spending, primarily
for fiscal year 2011, was considered.1 Further, because of the underlying law initiating these
performance audits, auditors also reviewed the District’s use of Proposition 301 sales tax monies and
how it accounted for dollars spent in the classroom.
In conducting this audit, auditors used a variety of methods, including examining various records,
such as available fiscal year 2011 summary accounting data for all districts and Colorado River
UHSD’s fiscal year 2011 detailed accounting data, contracts, and other district documents; reviewing
district policies, procedures, and related internal controls; reviewing applicable statutes; and
interviewing district administrators and staff.
To compare districts’ academic indicators, auditors developed a student achievement peer group
using poverty as the primary factor because poverty has been shown to be associated with student
achievement. Auditors also used secondary factors such as district type and location to further refine
these groups. Colorado River UHSD’s student achievement peer group includes Colorado River
UHSD and the three other union high school districts that also served student populations with
poverty rates greater than 26 percent in towns and rural areas. Auditors compared Colorado River
UHSD’s student AIMS scores to those of its peer group averages. Generally, auditors considered
Colorado River UHSD’s student AIMS scores to be similar if they were within 5 percentage points of
peer averages, slightly higher/lower if they were with 6 to 10 percentage points of peer averages,
higher/lower if they were within 11 to 15 percentage points of peer averages, and much higher/lower
if they were more than 15 percentage points higher/lower than peer averages. In determining the
District’s overall student achievement level, auditors considered the differences in AIMS scores
between Colorado River UHSD and its peers, as well as the District’s graduation rate and its Arizona
Department of Education-assigned letter grade.
To analyze Colorado River UHSD’s operational efficiency, auditors selected a group of peer districts
based on their similarities in district size, type, and location. This operational peer group includes
Colorado River UHSD and 19 other unified or union high school districts that also served between
1 Operational spending includes costs incurred for the District’s day-to-day operations. It excludes costs associated with repaying debt,
capital outlay (such as purchasing land, buildings, and equipment), and programs such as adult education and community service that are
outside the scope of preschool through grade-12 education.
page a-2
State of Arizona
2,000 and 7,999 students and were located in towns and rural areas. Auditors compared
Colorado River UHSD’s costs to its peer group averages. Generally, auditors considered
Colorado River UHSD’s costs to be similar if they were within 5 percent of peer averages, slightly
higher/lower if they were within 6 to 10 percent of peer averages, higher/lower if they were within
11 to 15 percent of peer averages, and much higher/lower if they were more than 15 percent
higher/lower than peer averages. However, in determining the overall efficiency of Colorado River
UHSD’s nonclassroom operational areas, auditors also considered other factors that affect
costs and operational efficiency, such as staffing levels, square footage per student, meal
participation rates, and bus capacity utilization, as well as auditor observations and any unique
or unusual challenges the District had. Additionally:
•• To assess the District’s computer information systems and network, auditors evaluated
certain controls over its logical and physical security, including user access to sensitive data
and critical systems, and the security of servers that house the data and systems. Auditors
also evaluated certain district policies over the systems, such as data sensitivity, backup,
and recovery; and reviewed the District’s written agreement with the IT service provider that
hosts its student information system.
•• To assess whether the District’s transportation program was managed appropriately and
functioned efficiently, auditors reviewed and evaluated required transportation reports,
driver files, bus maintenance and safety records, bus routing, bus capacity usage, and
vendor fuel card billing statements and receipts. Auditors also reviewed fiscal year 2011
transportation costs and compared them to peer districts’ average costs.
•• To assess whether the District’s administration effectively and efficiently managed district
operations, auditors evaluated administrative procedures and controls at the district and
school level, including reviewing personnel files and other pertinent documents and
interviewing district and school administrators about their duties. Auditors also reviewed
and evaluated fiscal year 2011 administration costs and staffing levels and compared these
to peer districts’.
•• To assess whether the District was in compliance with Proposition 301’s Classroom Site
Fund requirements, auditors reviewed fiscal year 2011 expenditures to determine whether
they were appropriate and if the District properly accounted for them. Auditors also reviewed
the District’s performance pay plans for both fiscal years 2010 and 2011 and analyzed how
performance pay was being distributed.
•• To assess the District’s financial accounting data, auditors evaluated the District’s internal
controls related to expenditure processing and scanned all payroll and accounts payable
transactions for proper account classification and reasonableness. Additionally, auditors
reviewed detailed payroll and personnel records for 30 of the 388 individuals who received
payments through the District’s payroll system and reviewed supporting documentation for
30 of the 8,859 accounts payable transactions in fiscal year 2011. Auditors also evaluated
other internal controls that were considered significant to the audit objectives and reviewed
fiscal year 2011 spending across operational areas.
•• To assess whether the District’s plant operations and maintenance function was managed
appropriately and functioned efficiently, auditors reviewed and evaluated fiscal year 2011
page a-3
Office of the Auditor General
plant operations and maintenance costs and district building space, and compared these costs
and capacities to peer districts’ averages.
•• To assess whether the District’s food service program was managed appropriately and
functioned efficiently, auditors reviewed fiscal year 2011 food service revenues and expenditures,
including labor and food costs, compared costs and staffing levels to peer districts’, reviewed
the Arizona Department of Education’s food service monitoring reports, and observed food
service operations.
We conducted this performance audit in accordance with generally accepted government auditing
standards. Those standards require that we plan and perform the audit to obtain sufficient,
appropriate evidence to provide a reasonable basis for our findings and conclusions based on our
audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings
and conclusions based on our audit objectives.
The Auditor General and her staff express their appreciation to the Colorado River Union School
District’s board members, superintendent, and staff for their cooperation and assistance throughout
the audit.
page a-4
State of Arizona
DISTRICT RESPONSE
DISTRICT RESPONSE
Home of
Mohave High School Thunderbirds,
River Valley High School Dust Devils
COLORADO RIVER UNION HIGH SCHOOL DISTRICT #2
P. O. Box 21479
Bullhead City, AZ 86439
(928) 768-1665
(928) 768-1702 fax
Administration Governing Board
Riley Frei, Superintendent Richard Hendrix, M.D., President
Darolene Brown, Director, Curriculum & Instruction Lori Crampton, Clerk
Geoffrey Tubbs, Director of Special Services Jon Moss, Member
Robert Rime, Director, Career & Technical Education Kari Hoffman, Member
Heather Engelhardt, Director, CRUHSD On-line Frank Waters, Member
Roni Hart, Business Manager
July 22, 2013
Ms. Debbie Davenport
Auditor General
2910 N. 44th Street, Suite 410
Phoenix, AZ 85018
Dear Ms. Davenport,
Enclosed is the audit response from Colorado River Union High School District for the performance audit
for fiscal year 2011.
We are very pleased that there were minimal findings. However, the District agrees with the findings and
we have already put several plans in place and are working on others to correct all findings.
I wish to thank you and your team for all of your hard work on this audit. The Colorado River Union
High School District will use this as a tool to be more efficient in every area of our work.
Please do not hesitate to contact me if I can be of further assistance.
Regards,
Riley Frei
Superintendent
Home of
Mohave High School Thunderbirds,
River Valley High School Dust Devils
District Response to Findings and Recommendations
Finding #1: District needs to strengthen controls over computer systems, fuel purchases, and cash
handling
1. The District should limit employee’s access to only those accounting system functions needed to
perform their work.
District Response: The District agrees with the findings and recommendation. The District has
implemented additional separation of duties and limited all users’ access to only what is required
for their job description.
2. The District should implement and enforce password requirements related to password length,
complexity, and expiration, and only the user should know passwords.
District Response: The District agrees with the findings and recommendation. The District has
worked with IT to implement and enforce password requirements related to password length,
complexity, and expiration. No list of passwords will be kept.
3. The District should develop and implement a formal process to ensure that terminated employees
have their IT system access promptly removed.
District Response: The District agrees with the findings and recommendation. The District has
implemented a procedure with HR to immediately notify IT upon an employee’s termination so
they can remove all access for that individual.
4. The District should ensure that its written agreement with its IT service provider outlines each
party’s responsibilities for the District’s student information system.
District Response: The District agrees with the findings and recommendation. District will be
more diligent in reviewing contracts to ensure specific terms are accurate and address the
concerns in the above recommendation.
5. The District should work with its local fuel vendor to ensure the vendor’s billing statements
include a means of identifying individuals purchasing fuel and the odometer readings of the
vehicles at the time of the fuel purchases.
District Response: The District agrees with the findings and recommendation. The District has
changed suppliers for their fuel purchases. The pumps have software that allows for more
accurate tracking.
6. The District should ensure that all fuel cards receipts are collected and properly reconciled to
credit card statements to ensure purchases are appropriate and billings are accurate prior to
payment.
District Response: The District agrees with the findings and recommendation. The District has
updated the process and accountability for checking out credit/gas cards and collecting receipts
for reconciliation of the credit card statement.
Home of
Mohave High School Thunderbirds,
River Valley High School Dust Devils
7. The District should strengthen its procedures for recording cash collections and reconciling daily
bookstore sales to cash collections.
District Response: The District agrees with the findings and recommendation. The District is
implementing a checks and balance system which will be performed by at least two employees.
The system will employ the use of receipts and a cash box or register depending on the location.
Finding #2: Districts Proposition 301 pay records incomplete and some performance pay goals did
not promote improved performance
1. The District should ensure that it retains supporting documentation in accordance with state
records retention schedules to demonstrate that performance pay goals were met.
District Response: The District agrees with the findings and recommendation. The District will
review and enforce the records retention schedules with all administrators and district office staff.
2. To promote improved performance, the District should establish meaningful and measureable
performance goals that are beyond what is already expected or required of employees.
District Response: The District agrees with the findings and recommendation. The District has
made modifications to the goals to increase the level of rigor to earn performance pay.

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Arizona State Library, Archives and Public Records--State Library of Arizona.

Full Text

Performance Audit
Colorado River Union
High School District
Division of School Audits
Debra K. Davenport
Auditor General
August • 2013
Report No. 13-07
A REPORT
TO THE
ARIZONA LEGISLATURE
The Auditor General is appointed by the Joint Legislative Audit Committee, a bipartisan committee composed of five senators and
five representatives. Her mission is to provide independent and impartial information and specific recommendations to improve the
operations of state and local government entities. To this end, she provides financial audits and accounting services to the State and
political subdivisions, investigates possible misuse of public monies, and conducts performance audits of school districts, state
agencies, and the programs they administer.
The Joint Legislative Audit Committee
Audit Staff
Ross Ehrick, Director
Mike Quinlan, Manager and Contact Person
Christine Medrano, Team Leader
Ben Gutierrez
Tammy Seilheimer
Copies of the Auditor General’s reports are free.
You may request them by contacting us at:
Office of the Auditor General
2910 N. 44th Street, Suite 410 • Phoenix, AZ 85018 • (602) 553-0333
Additionally, many of our reports can be found in electronic format at:
www.azauditor.gov
Representative John Allen, Vice Chair
Representative Paul Boyer
Representative Andrea Dalessandro
Representative Martin Quezada
Representative Kelly Townsend
Representative Andy Tobin (ex officio)
Senator Chester Crandell, Chair
Senator Judy Burges
Senator Rich Crandall
Senator Steve Gallardo
Senator Katie Hobbs
Senator Andy Biggs (ex officio)
2910 NORTH 44th STREET • SUITE 410 • PHOENIX, ARIZONA 85018 • (602) 553-0333 • FAX (602) 553-0051
MELANIE M. CHESNEY
DEPUTY AUDITOR GENERAL
DEBRA K. DAVENPORT, CPA
AUDITOR GENERAL
STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL
August 8, 2013
Members of the Arizona Legislature
The Honorable Janice K. Brewer, Governor
Governing Board
Colorado River Union High School District
Mr. Riley Frei, Superintendent
Colorado River Union High School District
Transmitted herewith is a report of the Auditor General, A Performance Audit of the Colorado
River Union High School District, conducted pursuant to A.R.S. §41-1279.03. I am also
transmitting within this report a copy of the Report Highlights for this audit to provide a quick
summary for your convenience.
As outlined in its response, the District agrees with all of the findings and recommendations.
My staff and I will be pleased to discuss or clarify items in the report.
Sincerely,
Debbie Davenport
Auditor General
2013
August • Report No. 13-07
Our Conclusion
REPORT HIGHLIGHTS
PERFORMANCE AUDIT
Similar student achievement and efficient operations
overall
Student achievement similar to
peer districts’—In fiscal year 2011,
Colorado River UHSD’s student AIMS
scores were similar to the peer districts’
averages. Additionally, under the
Arizona Department of Education’s A-F
Accountability Letter Grade System, the
District received an overall letter grade
of D, as did the only peer district that
was also graded. Further, Colorado
River UHSD’s 71-percent graduation
rate was similar to the peer districts’
74-percent average but lower than the
State’s 78-percent average.
Most operational costs similar to or lower
than peer districts’—In fiscal year 2011,
Colorado River UHSD operated efficiently
overall with most of its nonclassroom costs
similar to, or lower than, its peer districts’
averages. The District’s administration and
food service programs operated efficiently,
with much lower costs and despite a slightly
higher plant operations cost per pupil, the
District’s cost per square foot was similar
to the peer district average. The District’s
transportation costs were mixed with a higher cost per rider, but lower cost per mile.
Colorado River Union
High School District
District needs to strengthen controls over computer
systems, fuel purchases, and cash handling
Colorado River UHSD’s poor controls over its computer network, student information
system, and accounting system expose the District to an increased risk of errors and
fraud. Additionally, the District needs to improve controls over its fuel purchases and
bookstore cash-handling procedures.
Increased risk of unauthorized access to critical systems—Four district employees
have more access to the accounting system than is needed to perform their job duties.
Although no improper transactions were detected in the items we tested, access
beyond that which is necessary to perform job functions exposes the District to an
increased risk of fraud and errors. Additionally, the District does not have procedures
in place to ensure that only current employees have access to critical applications.
We found that five user accounts on the network and one user account in the student
information system were linked to employees who no longer worked for the District.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Math Reading Writing
Colorado River UHSD Peer group State-wide
Percentage of students who met or
exceeded state standards (AIMS)
Fiscal year 2011
Comparison of per-pupil expenditures
by operational area
Fiscal year 2011
Colorado River UHSD
Table 1: Comparison of Per-Pupil Expenditures FY 2011
HIGHLIGHTS:
Spending
Colorado
River
UHSD
Peer
group
average
State
average
Total per pupil $6,404 $7,026 $7,485
Classroom dollars 3,654 3,783 4,098
Nonclassroom
dollars
Administration 579 736 728
Plant operations 980 917 927
Food service 197 351 375
Transportation 360 360 352
Student support 316 528 571
Instruction
support 318 351 434
Per pupil
Colorado
River
UHSD
Peer
group
average
Administration $579 $736
Plant operations 980 917
Food service 197 351
Transportation 360 360
In fiscal year 2011, Colorado
River Union High School
District’s student AIMS
scores were similar to the
peer districts’ averages, and
it operated efficiently overall
with similar or lower costs
in most operational areas.
The District’s administrative
costs were lower than peer
districts’. However, it needs
to strengthen some controls
over its computer systems
and cash handling. The
District’s plant operations
costs per square foot were
similar to peer districts’, and
its food service costs were
much lower. The District’s
transportation costs were
mixed with a higher cost per
rider, but lower cost per mile;
however, the District needs to
improve its controls over fuel
purchases. Further, the District
did not maintain complete
Proposition 301 pay records,
and some of the District’s
performance pay plan goals
were so easily met that they
did not promote improved job
performance.
Proposition 301 pay records incomplete and some performance pay goals
did not promote improved performance
In fiscal year 2011, all of the District’s eligible employees received the full amount of performance pay. However,
the District did not maintain documentation to show that each of these employees had actually met their goals
to receive such amounts. Additionally, the District awarded performance pay for some goals that were easily
met. For example, teachers were awarded performance pay for administering a test of academic progress, but
they did not have to show that students met any expected or desired results on the test.
The District should:
••Retain supporting documentation to show that performance pay goals were met.
••Establish meaningful and measureable performance goals.
Recommendations
Colorado River Union
High School District
REPORT HIGHLIGHTS
PERFORMANCE AUDIT
August 2013 • Report No. 13-07
A copy of the full report is available at:
www.azauditor.gov
Contact person:
Mike Quinlan (602) 553-0333
Further, the District needs to strengthen password requirements for its network, student information system,
and accounting system.
District needs to strengthen controls over fuel purchases—Because Colorado River UHSD does not own
its own fuel tank, it obtains fuel from a local vendor’s site. However, the District was unable to determine from
the vendor’s billing statements whether all fuel purchases were made by district employees for district vehicles
and were appropriate based on transaction details. Although the vendor statements identified the vehicle
number, date, time, and type and amount of fuel purchased, they did not identify the employee fueling or the
vehicle odometer reading, and no fuel card was required to pump fuel. Instead, individuals only had to enter
an easily determined number to operate the fuel pumps. District drivers use fuel cards to purchase fuel from
other vendors while transporting students on field trips and athletic trips. However, the District did not ensure
that all fuel purchase receipts were submitted. We found that receipts for 57 of 247 fuel purchases, totaling
about $2,400, from one vendor were missing. Without receipts, the District cannot ensure that all purchases
are appropriate and that the District is being billed properly.
District should improve cash-handling procedures for bookstore operations—In fiscal year 2011, Colorado
River UHSD received approximately $730,000 at its school bookstores for various purposes, including student
activities, student course fees, and tax credit donations. However, the District did not have proper procedures
in place to ensure that money received was accounted for properly. For example, the bookstore at one school
used three different methods to record sales, but none of these methods were used consistently. Further, the
District lacked a sufficient process of reconciling daily sales to cash collected. As a result, the District could
not be sure that all sales had been recorded, leaving these monies more susceptible to loss, theft, or misuse.
The District should:
••Limit employees’ access to only those accounting system functions needed to perform their work.
••Implement and enforce stronger password requirements.
••Establish a process to promptly delete access to the system when an employee terminates employment.
••Work with its local fuel vendor to ensure billing statements include a means of identifying individuals
purchasing fuel and the odometer readings of the vehicles fueled.
••Ensure fuel card receipts are submitted and properly reconciled for all purchases.
••Strengthen bookstore cash collections procedures.
Recommendations
TABLE OF CONTENTS
continued
page i
Office of the Auditor General
1
Student achievement similar to peer districts’ averages 1
District operated efficiently overall with most costs similar to or lower than peer districts’ 2
Finding 1: District needs to strengthen controls over computer
3
3
4
4
5
5
Finding 2: District’s Proposition 301 pay records incomplete and some
7
Pay records were incomplete 7
Some performance pay goals so easily met that they did not promote improved
performance 8
9
Appendix
Objectives, Scope, and Methodology a-1
District Response
TABLE OF CONTENTS
concluded
page ii
State of Arizona
Table
1 Comparison of per-pupil expenditures by operational area
2
Figure
1 Percentage of students who met or exceeded state standards (AIMS)
1
DISTRICT OVERVIEW
page 1
Office of the Auditor General
Colorado River Union High School District is located about 50 miles north of Lake Havasu City on
the Arizona-Nevada border, in Mohave County. In fiscal year 2011, the District served 2,327 students
in 9th- through 12th-grade at its two schools.
In fiscal year 2011, Colorado River UHSD’s student achievement was similar to the peer districts’, on
average.1 Overall, the District operated efficiently, with most costs similar to or lower than peer
districts’. The District operated its administration and food service programs efficiently with costs that
were much lower than peer district averages, and despite a slightly higher plant operations cost per
pupil, the District’s cost per square foot was similar to the peer districts’ average. Additionally, its
transportation program operated with a higher cost per rider but lower cost per mile. However, the
District needs to strengthen controls over its computer systems, fuel purchases, and cash handling.
Additionally, the District should strengthen its performance pay plan goals and retain supporting
documentation to demonstrate that goals were met before payments from the Classroom Site Fund
are made.
Student achievement similar to peer
districts’ averages
In fiscal year 2011, 40 percent of the District’s students
met or exceeded state standards in math, 73 percent in
reading, and 53 percent in writing. As shown in Figure 1,
these scores were similar to the peer districts’ averages.
Further, under the Arizona Department of Education’s
A-F Accountability Letter Grade System, the District and
both of its schools received an overall letter grade of D,
as did one of the three peer districts.2 Letter grades for
the remaining two peer districts were not reported for
fiscal year 2011 because they had too few students
tested. The District’s fiscal year 2011 71-percent
graduation rate was similar to the peer districts’
74-percent average but lower than the State’s 78-percent
average.
1 Auditors developed two peer groups for comparative purposes. See page a-1 of this report’s Appendix for further explanation of the peer
groups.
2 The Arizona Department of Education’s A-F Accountability Letter Grade System assigns letter grades based primarily on academic growth
and the number of students passing AIMS.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Math Reading Writing
Colorado River
UHSD
Peer group
State-wide
Figure 1: Percentage of students who met or
exceeded state standards (AIMS)
Fiscal year 2011
(Unaudited)
Source: Auditor General staff analysis of fiscal year 2011 test results
on Arizona’s Instrument to Measure Standards (AIMS).
page 2
State of Arizona
District operated efficiently
overall with most costs similar
to or lower than peer districts’
As shown in Table 1 and based on auditors’
review of various performance measures, in
fiscal year 2011, Colorado River UHSD
operated efficiently overall with most of its
nonclassroom costs similar to, or lower
than, its peer districts’ averages. The
District’s fiscal year 2011 per-pupil spending
of $6,404 and classroom spending of
$3,654 were both slightly lower than peer
districts’ primarily because it did not receive
additional funding through voter-approved
budget overrides and received less student
transportation funding because it drove
fewer total miles. Although the District
operated efficiently overall, auditors identified a few opportunities for improvement.
Much lower administrative costs—Colorado River UHSD’s fiscal year 2011 administrative
costs were much lower per pupil than peer districts averaged—$579 compared to $736. The
District spent less on administration primarily because it employed fewer administrative staff as a
result of operating fewer schools than peer districts, on average. However, this report identified
some administrative practices that need strengthening (see Finding 1, page 3).
Similar plant operations costs—Colorado River UHSD’s $5.45 plant operations cost per
square foot was similar to the peer districts’ average of $5.52. The District’s plant operations cost
per pupil was slightly higher than peer districts averaged because, although the District had fewer
schools, its schools were larger, operating with more square footage per student.
Efficient food service program—The District operated its food service program efficiently with
a much lower cost per meal than the peer districts averaged—$1.79 compared to $2.60.
Additionally, the District’s program was self-supporting in fiscal year 2011. The District kept its
per-meal costs low by using student workers to help serve meals and by maximizing its use of
United States Department of Agriculture commodities.
Mixed transportation costs—Although the District’s cost per rider of $1,238 was 34 percent
higher than the peer districts’ average of $927, its per-mile cost of $2.67 was 9 percent lower than
the peer districts’ average cost of $2.93. These mixed costs are the result of the District driving 43
percent more miles per rider than peer districts, on average. However, the District needs to
strengthen controls over its fuel purchases (see Finding 1, page 3).
Colorado River UHSD
Table 1: Comparison of Per-Pupil Expenditures FY 2011
HIGHLIGHTS:
Spending
Colorado
River
UHSD
Peer
group
average
State
average
Total per pupil $6,4 04 $7,0 26 $7,4 85
Classroom dollars 3,654 3,783 4,098
Nonclassroom
dollars
Administration 579 736 728
Plant operations 980 917 927
Food service 197 351 375
Transportation 360 360 352
Student support 316 528 571
Instruction
support 318 351 434
Per pupil
Colorado
River
UHSD
Peer
group
average
Administration $5 79 $7 36
Plant operations 980 917
Food service 197 351
Transportation 360 360
Table 1: Comparison of per-pupil
expenditures by operational area
Fiscal year 2011
(Unaudited)
Source: Auditor General staff analysis of fiscal year 2011 Arizona
Department of Education student membership data and
district-reported accounting data.
page 3
Office of the Auditor General
FINDING 1
District needs to strengthen controls over computer
systems, fuel purchases, and cash handling
Colorado River UHSD needs to improve controls over its computer network, student information
system, and accounting system. Although no improper transactions were detected in the fiscal year
2011 transactions auditors reviewed, these poor controls expose the District to an increased risk of
errors and fraud. Additionally, the District needs to improve controls over its fuel purchases and
bookstore cash-handling procedures.
Increased risk of unauthorized access to critical systems
The District has weak controls over user access to its network and student information and
accounting systems, increasing the risk of unauthorized access to these critical systems.
Broad access to accounting system—Four of the District’s 11 accounting system users
have access to the system beyond what is required to perform their job duties. Two of these
employees have the ability to add new vendors, create and approve purchase orders, and pay
vendors without an independent review. One employee has the ability to add new employees, set
pay rates, and process payroll payments without an independent review. A fourth district employee,
who is a user of the accounting system, is also responsible for administering the District’s
accounting system, meaning she has access to all functions and settings within the accounting
system. Although no improper transactions were detected in the 30 payroll and 30 accounts
payable transactions for fiscal year 2011 auditors reviewed, such broad access exposes the
District to increased risk of errors, fraud, and misuse of sensitive information, such as processing
false invoices or adding and paying nonexistent vendors or employees.
Weak password requirements—The District needs stronger password requirements for its
network, student information system, and accounting system. The District’s network and
accounting system passwords are assigned by district technicians, and employees are not
required to change their passwords. Further, if employees want to change their passwords,
technicians have to be made aware of what the new passwords are, and they are stored in a folder
on the network. Therefore, the passwords are known by more than one individual. The District’s
student information system passwords are determined by each individual user. However, the
page 4
State of Arizona
District has not established adequate password complexity requirements—that is, passwords
do not need to contain numbers or symbols. Lastly, users are not prompted to periodically
change passwords for any of the systems. Common practice requires passwords to be at
least eight characters, contain a combination of alphabetic and numeric characters, and be
changed periodically. Additionally, users should change assigned passwords at first login,
and only the users should know them. These practices would decrease the risk of unauthorized
persons gaining access to the systems.
Inadequate procedures for removing terminated employees’ access to critical
applications—The District does not have formal procedures in place to ensure that only
current employees have access to critical systems. Auditors found that 5 of the 224 user
accounts on the network and 1 of the 180 user accounts in the student information system
were linked to employees who no longer worked for the District. District officials stated that
terminated employee accounts are not always disabled in a timely manner because the
District does not have a formal process to notify the Information Technology (IT) department
when an employee leaves the District. To reduce the risk of unauthorized access, the District
should create a formal procedure and promptly remove access when a user is no longer
employed by the District.
Insufficient agreement for hosting student information system
Colorado River UHSD uses a vendor to administer and host its student information system.
However, the District’s written agreement with its vendor does not stipulate each party’s
responsibilities. The agreement should specify responsibilities such as software licensing;
establishing and maintaining user access; ownership of data; ensuring the security of data; data
backup, storage, and recovery; and removal of terminated employees’ access.
District needs to strengthen controls over fuel purchases
Because Colorado River UHSD does not own its own fuel tank, it obtains fuel from a local
vendor’s site. In fiscal year 2011, the District received billing statements from the vendor
identifying the vehicle number, date, time, and type and amount of fuel purchased. However, the
statements did not identify the employee fueling or the vehicle odometer reading because the
system was not set up to record this information. Further, no fuel card was required, and
individuals only had to enter an easily determined number to operate the fuel pumps. As a result,
the District was unable to determine from these statements whether all fuel purchases were
made by district employees for district vehicles and were appropriate based on transaction
details.
Additionally, Colorado River UHSD provides fuel cards to drivers to purchase fuel from two
different vendors while transporting students on field trips and athletic trips. Upon returning from
page 5
Office of the Auditor General
a trip, drivers are required to submit all fuel purchase receipts to the District so that fuel receipts can
be reconciled to the vendors’ monthly fuel card statements. However, auditors noted that many fuel
receipts were missing. More specifically, auditors reviewed 12 monthly fuel card statements for one
of the two vendors and found that the District lacked receipts for 57 of 247 fuel purchases, totaling
approximately $2,400. Although the purchases reviewed appeared reasonable, documentation
should be retained to help ensure that all purchases are appropriate and that the District is being
properly billed by the vendor.
District should improve cash-handling procedures for bookstore
operations
In fiscal year 2011, Colorado River UHSD received cash for various purposes, including student
activities, student course fees, and tax credit donations. The majority of this cash, approximately
$730,000, was received by the District’s individual school bookstores. However, the District did not
have proper procedures in place for its bookstore operations to ensure that money received was
accounted for properly. For example, the bookstore at one school used three different methods to
record its sales and lacked a sufficient process of reconciling daily sales to cash collected. The
bookstore used a receipt book, a cash register, and a software system, but none of these methods
were consistently used, and the District could not be sure that all sales had been recorded. Failure
to adequately account for all money received left these monies more susceptible to loss, theft, or
misuse.
Recommendations
1. The District should limit employees’ access to only those accounting system functions needed
to perform their work.
2. The District should implement and enforce password requirements related to password length,
complexity, and expiration, and only the user should know passwords.
3. The District should develop and implement a formal process to ensure that terminated
employees have their IT system access promptly removed.
4. The District should ensure that its written agreement with its IT service provider outlines each
party’s responsibilities for the District’s student information system.
5. The District should work with its local fuel vendor to ensure the vendor’s billing statements
include a means of identifying individuals purchasing fuel and the odometer readings of the
vehicles at the time of the fuel purchases.
page 6
State of Arizona
6. The District should ensure that all fuel card receipts are collected and properly reconciled
to credit card statements to ensure purchases are appropriate and billings are accurate
prior to payment.
7. The District should strengthen its procedures for recording cash collections and reconciling
daily bookstore sales to cash collections.
page 7
Office of the Auditor General
FINDING 2
District’s Proposition 301 pay records incomplete and
some performance pay goals did not promote improved
performance
In fiscal year 2011, Colorado River UHSD spent its Classroom Site Fund (CSF) monies for purposes
authorized by statute.1 However, the District did not maintain documentation showing whether
employees who received performance pay monies actually met their goals. Further, some of the
performance goals were so easily met that they did not promote improved performance.
Pay records were incomplete
In fiscal year 2011, all of the District’s eligible employees received the full amount of performance pay
for which they were eligible. However, the District did not maintain documentation to show that each
of these employees had actually met their goals to receive such amounts. According to the District’s
plan, eligible employees were to complete documentation demonstrating that performance goals
were met and submit the documentation to administrators for evaluation. However, according to
district officials, performance pay documentation was returned to the employees after the
performance pay evaluations were completed. The District had lists from its principals stating which
employees met their goals. However, because it returned all documentation to the employees, the
District could not provide additional support that the goals were actually met. School districts are
required by state records retention schedules to retain this type of documentation for 4 years.2
Further, based on one of the principal’s lists, it appeared as though 4 of the 38 eligible employees at
that site did not meet all of the goals; however, all of the employees on the list received the full
performance pay amount.
1 In November 2000, voters passed Proposition 301, which increased the state-wide sales tax to provide additional resources for education
programs. Under statute, these monies, also known as Classroom Site Fund monies, may be spent only for specific purposes, primarily
increasing teacher pay.
2 Arizona State Library, Archives, and Public Records. General Records Retention Schedule for All Public Bodies, Finance Records. Schedule
Number 000-11-76.
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State of Arizona
Some performance pay goals so easily met that they did not
promote improved performance
In fiscal year 2011, the District made two separate payments to eligible employees for achieving
performance goals. The first payment was based on employees’ meeting the goals from the
fiscal year 2010 performance pay plan, and the second payment was based on employees’
meeting the goals from the fiscal year 2011 performance pay plan. However, both plans included
goals that were so easily met that they did not promote improved performance. For example,
Colorado River UHSD’s fiscal year 2010 performance pay plan allowed the following:
•• Teachers earned performance pay for administering a test regardless of how well
students performed on the test—Twenty percent of performance pay was earned by
teachers for administering a district-developed, standards-based student assessment of
academic progress. Teachers did not have to show that students met any expected or
desired results on the assessment; they simply had to administer the test.
•• Teachers earned performance pay for evaluating a parent/student survey regardless
of the parents’ or students’ reported satisfaction levels—Five percent of performance
pay was earned upon staff’s evaluating the results of a school quality parent and student
survey, but no minimum satisfaction level had to be met to receive the additional pay.
•• Teachers received performance pay for performing at minimum acceptable levels—
Teachers were eligible to receive approximately 38 percent of performance pay if they
achieved 29 of 32 items on the District’s teacher evaluation instrument and were not on an
improvement plan. However, according to district policy, a teacher who achieved only 29 of
32 of these items would be placed on an improvement plan. Therefore, the District rewarded
teachers with additional pay for meeting minimum district performance expectations rather
than for performance beyond what was required to avoid corrective action.
The District strengthened its fiscal year 2011 performance pay plan, which included goals related
to teacher professional development and performance, student achievement, and attendance
taking. However, the attendance-taking goal that made up 15 percent of the total potential
performance pay was easily met and did not promote improved performance. Specifically,
teachers were paid for taking accurate attendance, which was already required of a teacher by
district policy.
Awarding teachers performance pay for such easily obtained goals, and for performing duties
already required by their contracts, seems contrary to the goal of performance pay systems,
which are to provide powerful incentives for improved outcomes.
page 9
Office of the Auditor General
Recommendations
1. The District should ensure that it retains supporting documentation in accordance with state
records retention schedules to demonstrate that performance pay goals were met.
2. To promote improved performance, the District should establish meaningful and measureable
performance goals that are beyond what is already expected or required of employees.
page 10
State of Arizona
APPENDIX
page a-1
Office of the Auditor General
Objectives, Scope, and Methodology
The Office of the Auditor General has conducted a performance audit of the Colorado River Union
High School District pursuant to A.R.S. §41-1279.03(A)(9). Based in part on their effect on classroom
dollars, as previously reported in the Auditor General’s annual report, Arizona Public School District
Spending (Classroom Dollars report), this audit focused on the District’s efficiency and effectiveness
in four operational areas: administration, plant operations and maintenance, food service, and
student transportation. To evaluate costs in each of these areas, only operational spending, primarily
for fiscal year 2011, was considered.1 Further, because of the underlying law initiating these
performance audits, auditors also reviewed the District’s use of Proposition 301 sales tax monies and
how it accounted for dollars spent in the classroom.
In conducting this audit, auditors used a variety of methods, including examining various records,
such as available fiscal year 2011 summary accounting data for all districts and Colorado River
UHSD’s fiscal year 2011 detailed accounting data, contracts, and other district documents; reviewing
district policies, procedures, and related internal controls; reviewing applicable statutes; and
interviewing district administrators and staff.
To compare districts’ academic indicators, auditors developed a student achievement peer group
using poverty as the primary factor because poverty has been shown to be associated with student
achievement. Auditors also used secondary factors such as district type and location to further refine
these groups. Colorado River UHSD’s student achievement peer group includes Colorado River
UHSD and the three other union high school districts that also served student populations with
poverty rates greater than 26 percent in towns and rural areas. Auditors compared Colorado River
UHSD’s student AIMS scores to those of its peer group averages. Generally, auditors considered
Colorado River UHSD’s student AIMS scores to be similar if they were within 5 percentage points of
peer averages, slightly higher/lower if they were with 6 to 10 percentage points of peer averages,
higher/lower if they were within 11 to 15 percentage points of peer averages, and much higher/lower
if they were more than 15 percentage points higher/lower than peer averages. In determining the
District’s overall student achievement level, auditors considered the differences in AIMS scores
between Colorado River UHSD and its peers, as well as the District’s graduation rate and its Arizona
Department of Education-assigned letter grade.
To analyze Colorado River UHSD’s operational efficiency, auditors selected a group of peer districts
based on their similarities in district size, type, and location. This operational peer group includes
Colorado River UHSD and 19 other unified or union high school districts that also served between
1 Operational spending includes costs incurred for the District’s day-to-day operations. It excludes costs associated with repaying debt,
capital outlay (such as purchasing land, buildings, and equipment), and programs such as adult education and community service that are
outside the scope of preschool through grade-12 education.
page a-2
State of Arizona
2,000 and 7,999 students and were located in towns and rural areas. Auditors compared
Colorado River UHSD’s costs to its peer group averages. Generally, auditors considered
Colorado River UHSD’s costs to be similar if they were within 5 percent of peer averages, slightly
higher/lower if they were within 6 to 10 percent of peer averages, higher/lower if they were within
11 to 15 percent of peer averages, and much higher/lower if they were more than 15 percent
higher/lower than peer averages. However, in determining the overall efficiency of Colorado River
UHSD’s nonclassroom operational areas, auditors also considered other factors that affect
costs and operational efficiency, such as staffing levels, square footage per student, meal
participation rates, and bus capacity utilization, as well as auditor observations and any unique
or unusual challenges the District had. Additionally:
•• To assess the District’s computer information systems and network, auditors evaluated
certain controls over its logical and physical security, including user access to sensitive data
and critical systems, and the security of servers that house the data and systems. Auditors
also evaluated certain district policies over the systems, such as data sensitivity, backup,
and recovery; and reviewed the District’s written agreement with the IT service provider that
hosts its student information system.
•• To assess whether the District’s transportation program was managed appropriately and
functioned efficiently, auditors reviewed and evaluated required transportation reports,
driver files, bus maintenance and safety records, bus routing, bus capacity usage, and
vendor fuel card billing statements and receipts. Auditors also reviewed fiscal year 2011
transportation costs and compared them to peer districts’ average costs.
•• To assess whether the District’s administration effectively and efficiently managed district
operations, auditors evaluated administrative procedures and controls at the district and
school level, including reviewing personnel files and other pertinent documents and
interviewing district and school administrators about their duties. Auditors also reviewed
and evaluated fiscal year 2011 administration costs and staffing levels and compared these
to peer districts’.
•• To assess whether the District was in compliance with Proposition 301’s Classroom Site
Fund requirements, auditors reviewed fiscal year 2011 expenditures to determine whether
they were appropriate and if the District properly accounted for them. Auditors also reviewed
the District’s performance pay plans for both fiscal years 2010 and 2011 and analyzed how
performance pay was being distributed.
•• To assess the District’s financial accounting data, auditors evaluated the District’s internal
controls related to expenditure processing and scanned all payroll and accounts payable
transactions for proper account classification and reasonableness. Additionally, auditors
reviewed detailed payroll and personnel records for 30 of the 388 individuals who received
payments through the District’s payroll system and reviewed supporting documentation for
30 of the 8,859 accounts payable transactions in fiscal year 2011. Auditors also evaluated
other internal controls that were considered significant to the audit objectives and reviewed
fiscal year 2011 spending across operational areas.
•• To assess whether the District’s plant operations and maintenance function was managed
appropriately and functioned efficiently, auditors reviewed and evaluated fiscal year 2011
page a-3
Office of the Auditor General
plant operations and maintenance costs and district building space, and compared these costs
and capacities to peer districts’ averages.
•• To assess whether the District’s food service program was managed appropriately and
functioned efficiently, auditors reviewed fiscal year 2011 food service revenues and expenditures,
including labor and food costs, compared costs and staffing levels to peer districts’, reviewed
the Arizona Department of Education’s food service monitoring reports, and observed food
service operations.
We conducted this performance audit in accordance with generally accepted government auditing
standards. Those standards require that we plan and perform the audit to obtain sufficient,
appropriate evidence to provide a reasonable basis for our findings and conclusions based on our
audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings
and conclusions based on our audit objectives.
The Auditor General and her staff express their appreciation to the Colorado River Union School
District’s board members, superintendent, and staff for their cooperation and assistance throughout
the audit.
page a-4
State of Arizona
DISTRICT RESPONSE
DISTRICT RESPONSE
Home of
Mohave High School Thunderbirds,
River Valley High School Dust Devils
COLORADO RIVER UNION HIGH SCHOOL DISTRICT #2
P. O. Box 21479
Bullhead City, AZ 86439
(928) 768-1665
(928) 768-1702 fax
Administration Governing Board
Riley Frei, Superintendent Richard Hendrix, M.D., President
Darolene Brown, Director, Curriculum & Instruction Lori Crampton, Clerk
Geoffrey Tubbs, Director of Special Services Jon Moss, Member
Robert Rime, Director, Career & Technical Education Kari Hoffman, Member
Heather Engelhardt, Director, CRUHSD On-line Frank Waters, Member
Roni Hart, Business Manager
July 22, 2013
Ms. Debbie Davenport
Auditor General
2910 N. 44th Street, Suite 410
Phoenix, AZ 85018
Dear Ms. Davenport,
Enclosed is the audit response from Colorado River Union High School District for the performance audit
for fiscal year 2011.
We are very pleased that there were minimal findings. However, the District agrees with the findings and
we have already put several plans in place and are working on others to correct all findings.
I wish to thank you and your team for all of your hard work on this audit. The Colorado River Union
High School District will use this as a tool to be more efficient in every area of our work.
Please do not hesitate to contact me if I can be of further assistance.
Regards,
Riley Frei
Superintendent
Home of
Mohave High School Thunderbirds,
River Valley High School Dust Devils
District Response to Findings and Recommendations
Finding #1: District needs to strengthen controls over computer systems, fuel purchases, and cash
handling
1. The District should limit employee’s access to only those accounting system functions needed to
perform their work.
District Response: The District agrees with the findings and recommendation. The District has
implemented additional separation of duties and limited all users’ access to only what is required
for their job description.
2. The District should implement and enforce password requirements related to password length,
complexity, and expiration, and only the user should know passwords.
District Response: The District agrees with the findings and recommendation. The District has
worked with IT to implement and enforce password requirements related to password length,
complexity, and expiration. No list of passwords will be kept.
3. The District should develop and implement a formal process to ensure that terminated employees
have their IT system access promptly removed.
District Response: The District agrees with the findings and recommendation. The District has
implemented a procedure with HR to immediately notify IT upon an employee’s termination so
they can remove all access for that individual.
4. The District should ensure that its written agreement with its IT service provider outlines each
party’s responsibilities for the District’s student information system.
District Response: The District agrees with the findings and recommendation. District will be
more diligent in reviewing contracts to ensure specific terms are accurate and address the
concerns in the above recommendation.
5. The District should work with its local fuel vendor to ensure the vendor’s billing statements
include a means of identifying individuals purchasing fuel and the odometer readings of the
vehicles at the time of the fuel purchases.
District Response: The District agrees with the findings and recommendation. The District has
changed suppliers for their fuel purchases. The pumps have software that allows for more
accurate tracking.
6. The District should ensure that all fuel cards receipts are collected and properly reconciled to
credit card statements to ensure purchases are appropriate and billings are accurate prior to
payment.
District Response: The District agrees with the findings and recommendation. The District has
updated the process and accountability for checking out credit/gas cards and collecting receipts
for reconciliation of the credit card statement.
Home of
Mohave High School Thunderbirds,
River Valley High School Dust Devils
7. The District should strengthen its procedures for recording cash collections and reconciling daily
bookstore sales to cash collections.
District Response: The District agrees with the findings and recommendation. The District is
implementing a checks and balance system which will be performed by at least two employees.
The system will employ the use of receipts and a cash box or register depending on the location.
Finding #2: Districts Proposition 301 pay records incomplete and some performance pay goals did
not promote improved performance
1. The District should ensure that it retains supporting documentation in accordance with state
records retention schedules to demonstrate that performance pay goals were met.
District Response: The District agrees with the findings and recommendation. The District will
review and enforce the records retention schedules with all administrators and district office staff.
2. To promote improved performance, the District should establish meaningful and measureable
performance goals that are beyond what is already expected or required of employees.
District Response: The District agrees with the findings and recommendation. The District has
made modifications to the goals to increase the level of rigor to earn performance pay.